Business Combinations

12 Months Ended

Sep. 30, 2012

Business Combinations [Abstract]

Business Combinations

2.Business Combinations

During fiscal 2012, the Company completed the acquisition of a medical physics practice, and established a domestic unconsolidated joint venture, which provides radiation measurement services, neither of which were individually, or in the aggregate, material to the Company’s consolidated financial statements.

During fiscal 2011, the Company established an unconsolidated joint venture in Turkey, which provides radiation measurement services, and completed the acquisition of three medical physics practices, none of which were individually, or in the aggregate, material to the Company’s consolidated financial statements.

Acquisition of IZI

On November 14, 2011, Landauer acquired all of the outstanding equity interests of IZI, a leading provider of high quality medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures, for $93,000 plus working capital and the assumption of liabilities.  The Company completed the acquisition of IZI as a platform to expand into the radiation oncology, radiology, and image guided surgery end markets.  The operating results of IZI are reported in the Medical Products reporting segment.

A portion of the purchase price, in the amount of $26,941, was applied to repay the outstanding indebtedness of IZI and certain unpaid expenses incurred by IZI and other disclosed parties in connection with the transaction. Landauer also deposited $9,300 of the purchase price into an escrow account, which will be held until January 2013 and applied to the settlement of the IZI seller’s indemnification obligations, if any, in connection with the transaction.  The Company funded the acquisition through borrowings under the new credit agreement with a syndicate of lenders led by BMO Harris and PNC Bank.

The following table summarizes the $94,283 of consideration transferred to acquire IZI and the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition.

(Dollars in Thousands)
Current assets	$	4,587
Property, plant and equipment		763
Intangible assets		27,000
Goodwill		64,069
Non-current deferred taxes, net		212
Other non-current assets		24
Current liabilities		(2,196)
Other long-term liabilities		(176)
Total assets acquired and liabilities assumed	$	94,283

The excess of the consideration transferred over the fair value of the net tangible and intangible assets acquired resulted in goodwill of $64,069, which is attributable primarily to the earnings power of the future products and services expected to be produced by IZI, new customer expansion opportunities in adjacent markets that are expected to result from the business combination with Landauer, and the potential to acquire or merge with other businesses. The goodwill has been assigned to the Medical Products reporting segment.  For income tax purposes, the Company is amortizing goodwill of $64,641 over 15 years.  The Company acquired trademarks and tradenames in the amount of $2,000 which have indefinite lives, patents in the amount of $2,000 which are being amortized over 7 years, and $23,000 of customer relationships which are being amortized over 15 years.  For income tax purposes, the values of the trademarks and tradenames, patents and customer relationships are being amortized over 15 years.

IZI’s revenues of $13,541 and net income of $3,197 were recognized in the Company’s consolidated financial statements for the period from November 14, 2011 to September 30, 2012.

Acquisition of GPS

On November 9, 2009, Landauer, Inc. completed the acquisition of all of the issued and outstanding capital stock of GPS for $22,000. GPS is a nationwide service provider of clinical physics support, equipment commissioning and accreditation support, and imaging equipment testing. The Company completed the acquisition of GPS as a platform to expand into the medical physics services market and reports the operating results in the Medical Physics reporting segment. 

The consideration transferred included amounts applied by Landauer at the closing to repay all of the outstanding indebtedness of GPS. Landauer also deposited $1,000 of the consideration transferred into an escrow account to be held for a period of 18 months and applied to the settlement of the GPS stockholders’ indemnification obligations, if any, in connection with the transaction. The escrow was released in May 2011. The Company funded the consideration transferred through a combination of borrowings under its credit agreement and cash on hand.

The following table summarizes the $22,000 of consideration transferred to acquire GPS and the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition.

(Dollars in Thousands)
Current assets	$	804
Property, plant and equipment		1,040
Intangible assets		5,300
Goodwill		17,380
Current liabilities		(918)
Other long-term liabilities		(250)
Long-term deferred taxes, net		(1,356)
Total assets acquired and liabilities assumed	$	22,000

The excess of the consideration transferred over the fair value of the net tangible and intangible assets acquired resulted in goodwill of $17,380, which is attributable primarily to the value of the acquired assembled workforce and GPS’ position as a leading provider in a large fragmented growth market. The goodwill has been assigned to the Medical Physics reporting segment. The Company is deducting $4,228 of goodwill and $25 for a non-compete agreement for income tax purposes. The Company acquired a tradename in the amount of $900 (see footnote 5 “Abandonment Charges”), and $4,400 of customer relationships which are being amortized over 15 years.

GPS’s revenues of $13,305 and net loss of $617 were recognized in the Company’s consolidated financial statements for the period from November 1, 2009 to September 30, 2010. The revenues and results of operations of GPS from November 1 to the date of acquisition, November 9, were not material to the consolidated financial statements. 

Other Acquisitions

During fiscal 2010, the Company completed other various acquisitions which are presented in the aggregate as they were not individually material to the Company’s consolidated financial statements.

On November 2, 2009, Landauer completed the acquisition of all issued and outstanding capital stock of GDM, a Swedish provider of radon measurement services. GDM is based near Stockholm, Sweden and provides measurement services throughout the Scandinavian region and Europe. The consideration transferred for GDM was $6,603. On October 2, 2009, Landauer acquired the assets of a dosimetry service provider in Sweden, PDM. The consideration transferred for PDM was $1,085. These acquisitions are consistent with the Company’s strategy to expand into new international markets, primarily by investing in or acquiring existing radiation measurement service providers with a prominent local presence. These acquisitions are reported in the Radiation Measurement reporting segment. 

On June 1, 2010, Landauer acquired certain assets of Upstate Medical Physics, Inc. (“UMP”), a New York company providing imaging medical physics services, for consideration transferred of $2,231. This acquisition is aligned with the Company’s strategy to expand into the medical physics services market and is reported in the Medical Physics reporting segment.

The aggregate consideration transferred and the identifiable assets acquired and liabilities assumed based on their fair values as of the date of the GDM, PDM and UMP acquisitions were as follows:

(Dollars in Thousands)
Current assets	$	2,088
Property, plant and equipment		606
Intangible assets		1,389
Goodwill		8,130
Current liabilities		(2,157)
Other long-term liabilities		(137)
Total assets acquired and liabilities assumed	$	9,919

The excess of the consideration transferred over the fair value of the net tangible and intangible assets acquired resulted in goodwill for these acquisitions of $8,130, of which $6,798 and $1,332 has been assigned to the Radiation Measurement segment and the Medical Physics segment, respectively. The Company expects to deduct approximately $1,717 of goodwill for income tax purposes. The Company acquired customer lists, the fair value of which was determined to be $1,389, which are being amortized over 15 years.

The acquired businesses contributed revenues of $5,043 and earnings of $490 to the Company for the period from their respective dates of acquisition to September 30, 2010. 

Unaudited Proforma Results

The following unaudited proforma summary presents consolidated information of the Company as if these business combinations had occurred as of the beginning of the respective periods.

	September 30, 2012
(Dollars in Thousands)		Landauer, Inc. Actual		Landauer, Inc. Proforma
Revenues	$	152,400	$	154,658
Net income attributed to Landauer, Inc.		19,270		19,404
		September 30, 2011
(Dollars in Thousands)		Landauer, Inc. Actual		Landauer, Inc. Proforma
Revenues	$	120,458	$	139,096
Net income attributed to Landauer, Inc.		24,538		24,132
	September 30, 2010
(Dollars in Thousands)		Landauer, Inc. Actual		Landauer, Inc. Proforma
Revenues	$	114,367	$	119,040
Net income attributed to Landauer, Inc.		23,674		23,767

The proforma results include adjustments to the acquired businesses’ accounting policies to align with those of Landauer. Certain other adjustments to actual results, together with the consequential tax effects, include: elimination of pretax acquisition and reorganization costs in fiscal 2010; customer freight expense netted against customer freight revenues; increased costs to reflect the impact of the increase, upon acquisition, in finished goods fair value; additional amortization for intangible assets; elimination of management fees charged by IZI’s former majority shareholder; and elimination of IZI’s interest expense related to its pre-existing debt agreements. The proforma adjustments also reflect: additional interest expense incurred in connection with debt financing of the acquisitions compared to interest expense under the Company’s pre-existing debt agreements; amortization of debt issuance costs; and the income tax impact of these adjustments. The unaudited proforma information is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had been effective as of the beginning of the periods presented.